Original owner liable to pay accident victim: Supreme Court

If vehicle ownership is not updated in the official records after its sale, the original owner will have to cough up damages if the vehicle is involved in a crash even though the new owner is responsible.

Take note, vehicle owners: after you sell your car, make sure the change in ownership is updated in the official records of the Regional Transport Authority (RTA). Otherwise, according to a recent Supreme Court order, you will have to cough up damages if the vehicle is involved in a crash even though the new owner is responsible.

The judgment, delivered last week by a bench led by justice UU Lalit, says transfer of ownership of a vehicle does not absolve the original owner of the liability to pay compensation for an accident, unless the change is effected in the RTA files.

With its verdict, the top court dismissed an appeal by Prakash Chand Daga questioning a Punjab and Haryana high court judgment of April 5, 2018, that upheld the Chandigarh Motor Accidents Claims Tribunal’s 2011 order holding him liable to pay part of the compensation amount of ₹12.47 lakh awarded to the victim of a road accident in which the appellant’s car was involved. The money was to be paid jointly by him and Saveta Sharma, who purchased his vehicle.

“Even though in law there would be a transfer of ownership of the vehicle, that by itself would not absolve the party in whose name the vehicle stands in RTO records from liability to a third person,” the bench, also comprising justice DY Chandrachud said.

The bench also cleared an interest of 7.5%, to be paid from the date of filing the suit till final realisation, on the total compensation amount. Daga had sold his Santro car to Sharma on September 11, 2009. Although he received the sale amount, in the RTA records he continued to be the original owner. Daga’s lawyer submitted that the accident had occurred within 30 days of the transfer and the statutory period prescribed under law to approach the authority for paper work had not expired by then. Therefore, such a liability could not be placed on his client.

But the bench rejected the contention, saying the transfer of the vehicle ought to be registered within 30 days of sale. However, the Motor Vehicles Act, 1988, obliges the transferor to report the sale to the authority, where the vehicle was originally registered, within 14 days.

The transferee, too, was bound to report purchase to RTO within whose jurisdiction he/she has residence or place of business where the car would be parked. Both transferor and transferee are required to report the transfer to the authority, the court said.